Bitcoin’s rally to $900 has been widely celebrated in the cryptocurrency community, however, many alternative digital currencies have been decimated over the last few days as a result of Bitcoin’s meteoric rise.

Majority of alternative digital assets like Ethereum, Monero, Factom, MaidSafeCoin and many others are traded against Bitcoin on exchanges like Poloniex, so any rapid appreciation in the price of Bitcoin leads to rapid sell-offs in most of these assets.

The Losers:

Ether, the digital token of the Ethereum blockchain platform and the second most valuable digital asset in the world, was hit fairly hard, dropping more than 10% over the past 24h. Ether hit a low of 0.0078 - a price not seen December 6, 2016, when ETH traded all the way down to 0.0076.

The token of the Augur prediction market, which is built on top of the Ethereum blockchain, also sustained heavy losses on Poloniex, dumping by more than 15% to a low of 0.0027 on Poloniex.

Factoids, the tokens of the Factom data storage blockchain network, have stayed more or less unchanged over the last 24h, however, the tokens have lost a considerable amount of ground against Bitcoin since Tuesday (December 20), when when the exchange rate was hoovering around 0.004. At press time, FCT is trading at 0.0028!

The privacy-centric cryptocurrencies - Monero and Zcash - have held up fairly well over the last few days; Monero gained about 1% today; Zcash gained an impressive 23% over the past 24h, hitting a high of 0.0718.

Litecoin, the 4th largest digital currency by market capitalization, was also among the small group of alternative digital assets to appreciate along with Bitcoin, gaining close to 10% today. The token of blockchain-based social media platform Steemit has also managed to carve out a small gain today, appreciating about 5%.

Bitcoin hit a 3-year high of $830 today. The rise in the value of the digital currency has been attributed mainly to capital flight from China by many financial analysts and cryptocurrency experts.

At press time, bitcoin is trading on American & European exchanges around $820 per coin, but the digital currency is trading with a twenty dollar premium - ¥5846 per bitcoin ($842) - on Chinese exchanges. The poor performance on the yuan over the past three years - which has devalued about 15% against the U.S. dollar since the start of 2014 - has spurred an increasing drove of Chinese investors to look to bitcoin as a way to preserve purchasing power.

During the same 3-year period, Bitcoin has appreciated almost 24% against the yuan!

Chinese financial regulators have been trying to figure out ways to prevent capital flight via bitcoin since November of this year. Regulators began to notice that bitcoin-savvy Chinese were buying up bitcoin on local exchanges and then selling the acquired bitcoin on foreign marketplaces, thus circumventing existing cross-border fund flow limits, according to a Bloomberg report.

Yesterday, financial authorities in the Philippines echoed the Chinese government’s sentiments regarding bitcoin’s role in the remittance industry. In an interview in Manila, Nestor Espenilla, deputy governor at Bangko Sentral ng Pilipinas, said the volume of transactions involving cryptocurrencies is “rising very quickly” due to the cost-effective and speedy nature of the technology.

Espenilla also explained that more strict regulations may be needed to protect consumers and prevent money laundering from taking place, “We are studying putting virtual currency exchange operators under a more formal regulatory framework,” he said.

The Philippine central bank estimates that turnover in the digital currency space in the country now stands at $2 million on a monthly basis.

The Trump Effect:

Bitcoin’s meteoric price rise has been mainly chalked up to Chinese capital flight, but much less attention has been given to the many pro-bitcoin entrepreneurs, politicians and businessmen in the upcoming Trump administration; billionaire tech veteran and BitPay investor, Peter Thiel, is part of Trump’s advisory board; Republican Congressman Mick Mulvaney, an ardent supporter of digital currencies and blockchain technology, was nominated to budget director by President-elect Donald Trump.

The assassination of the Russian ambassador in Ankara has rattled financial markets, especially the Turkish lira, which has dropped almost 1% against the greenback.

Turkish President Recep Tayyip Erdogan has previously called on patriotic Turks to support the country's plunging currency by converting their foreign assets into lira. But today’s events may set the stage for further losses for the Turkish national currency as global investors react to Turkey’s deteriorating geopolitical situation.

However, today’s brutal assassination of Russian ambassador Andrey Karlov - which can be viewed on various social media sites - may put a full stop to any future currency trading agreements between Turkey and Russia.

The lira’s disastrous performance against the dollar was greatly exasperated by the U.S. presidential election, which sent the USD/TRY exchange rate to an all-time high of 3.5966 by the 2nd of December, with the area between 3.54 - 3.56 acting as resistance for most of this month.

Bitcoin trading on P2P site LocalBitcoins picked up steam in Australia last week as authorities unveiled plans to deal with the Australian black market economy, which amounts to 1.5% of Australian GDP.

Additionally, to combat financial crimes, Australian regulators may consider banning the $100 note, as use of this particular denomination has skyrocketed among Australians over the past two years.

Data from Coin.dance shows turnover in Australia hitting an all-time high of $1,357,991 Aussie dollars on LocalBitcoins, the world’s most popular peer-to-peer marketplace for the digital currency.

Trading in the digital currency has been on a steady climb since the beginning of the year. For the first week of January, 2016, volume was only $433,946 - three times less than the figure printed last week.

While the Australian dollar has lost about 6.1% against the U.S. dollar since the start of November, Bitcoin has appreciated against the AUD about 28% in the same period.

Banco de México surprised a majority of market analysts today by hiking the overnight interbank interest rate by 50 basis points to 5.75 percent. Most economists had forecast only a 25-point hike.
The rate hike had a positive effect on the Mexican peso, which appreciated by 21 cents against the greenback (1.01%).

The Mexican central bank said that improved global economic conditions in 2016, as well as an improving labor market, factored into the decision to hike rates:

"During the fourth quarter, while the labor market has continued to improve and there has been a
moderate acceleration of wages."

The press release also states that Banco de México followed the lead of the Federal Reserve in the United States, which hiked interest rates yesterday by 25 basis points to 0.75 percent, sending the greenback higher against all major currencies. Additionally, Banco de México left the door open for further rate hikes, citing an anticipated rise in inflation:

"Fiscal policy and monetary policy in the United States has led to a significant appreciation of the of the dollar against virtually all currencies, including those in advanced countries. In the Euro and Japan this phenomenon has mitigated the deflationary fears. This allow us to anticipate greater inflationary pressures at the global level and possibly a less accommodating monetary policy going forward."

At press time, the USD/MXN is hovering around 20.324, which is where the pair was trading before the FED interest rate announcement, yesterday.

The FED hikes rates today for the first time this year. The 0.25% hike cratered equity and foreign currency markets, while the dollar appreciated substantially in the hours following the news. The S&P 500 futures market hit an intraday low of 2248.25, closing down 24.72 points (-1.09%)!

One of the biggest casualties of the FED rate hike was the gold market, which dropped about $31, hitting a low of $1136 on the day. While the market has recovered somewhat in the Asian trading session, gold was the second-biggest loser in percentage terms (-2.67%).

The Japanese yen was the biggest loser of them all, dropping a whopping 2.68% against the greenback.

The EUR/USD and GBP/USD dropped 1.88% and 1.63% respectively, while the Canadian dollar lost about 1.85% against the U.S. dollar.

The Australian government will be launching a new financial task force that will be overseeing taxation in the cash economy. Kelly O'Dwyer, Financial Services Minister of Australia, said details regarding the new unit will be forthcoming in the mid-year budget, which is set to be released next Monday.

The measure is part of the Australian government's multi-pronged strategy of reclaiming some portion of lost tax revenue. According to some estimates, the black economy of Australia is valued at $21 billion. This figure amounts to about 1.5% of the Australian GDP, “If we can get a percentage of that, obviously that’s revenue that is owed to the Australian people,” said Ms. O'Dwyer, in an interview with ABC radio.

Michael Andrew, former chairman of KPMG, will be heading the new task force. Australian financial regulators, The Reserve Bank of Australia and The Australian Taxation Office will be collaborating with the newly formed organisation. Along with tackling illicit black market activity, the task force will also focus on a variety of financial crimes.

As part of the attack on the black market sector of the Australian economy, regulators may consider removing the $100 AUD banknote from circulation.

When asked about the future of the $100 note, Ms. O'Dwyer told ABC radio:

Popularity of the $100 note has surged this year! According to the most recent report published by the Reserve Bank, the amount of $100 banknotes grew by 9% in 2015/2016. This figure is about 1.5% higher than the 10-year average, which stands at roughly 7.5 percent.

The bank’s report explains that the rise in $100 notes can be attributed to fluctuation of exchange rates and economic uncertainty, however, the report notes that “growth in high-denomination banknotes is well above recent growth in nominal income.”

The report also states that $100 notes are hoarded in times of low interest rates and used as “store of wealth.”

OB1, the company behind the Bitcoin-powered digital marketplace OpenBazaar, announced today the completion of a $3,000,000 funding round that saw participation from Union Square Ventures (USV), Andreessen Horowitz and BlueYard Capital.

This new round of funding brings the total invested in OB1 to $4 million. In April of 2015, $1 million was injected into OB1 from USV, Horowitz and angel investor William Mougayar, to get OpenBazaar up and running.

OpenBazaar essentially allows eBay-style online commerce without the need for a corporate intermediary.

“By removing the intermediaries for commerce online, OpenBazaar enables its users to avoid paying fees or having their trade controlled by middlemen. OpenBazaar has been used by tens of thousands of people internationally since its launch in April of this year.”

The project is open-source and the new funding will be used by OB1 to expand the functionality of platform and to roll out the new OpenBazaar 2.0, which will use the InterPlanetary File System (IPFS) for storing and maintaining listings.

OpenBazaar’s success over the past year was sufficient to prompt further investment from USV, “The reach and diversity of OpenBazaar usage shows the potential for decentralized applications: within a week of its release, buyers and sellers from 129 countries joined the network and began transacting with each other for free,” explained Brad Burnham, managing partner at USV.

The Berlin-based BlueYard Capital is also a firm supporter of the decentralization movement and backed OB1 to help bring the OpenBazaar platform into the mainstream, “If OB1 can develop OpenBazaar into a marketplace that is suitable for mainstream adoption and provide a substantially better business proposition to merchants and buyers, it could become a superior trade platform for large global markets,” states BlueYard Capital.

While the recently-formed, $120-million BlueYard Capital fund has only just started to back bitcoin startups, USV & Andreessen Horowitz have been pouring millions into the digital currency space over the last two years. More recently, Union Square Ventures and Andreessen Horowitz placed $10 million into cryptocurrency-focused hedge fund Polychain Capital.

In a televised speech on Sunday night, Venezuelan President Nicolas Maduro announced that the 100-bolivar note - the highest-denomination note in Venezuela, which trades on the black market for 2 U.S. cents - will be taken out of circulation in order to stem currency traffickers.

The Venezuelan government has decided to follow in the steps of the Modi administration in India, which unleashed chaos with its 500 & 1000-rupee ban in November, sold to the Indian public under the pretense of fighting terrorism and corruption.

According to Maduro’s speech, there are entire warehouses in neighboring Colombia, where in excess of 300 billion bolivares are hoarded by criminal gangs. Maduro accused “imperialist forces” of waging economic war on Venezuela in a bid to destabilize the country’s economic, political and social fabric.

The United Socialist Party of Venezuela published several photos on Twitter that allegedly show the storehouses of the traffickers.

Additionally, Maduro explained that part of the 100-bolivar-ban is to catch the currency traffickers, who have been profiting by purchasing subsidized goods in Venezuela with notes bought on the cheap on black markets, off guard:

"I have given the orders to close all land, maritime and air possibilities so those bills taken out can't be returned and they're stuck with their fraud abroad."

Opposition leaders in Venezuela have slammed Maduro for the unprecedented move. Henrique Capriles, Governor of Miranda and a fierce critic of the Maduro administration, took to Twitter to voice his disapproval.

An English translation of Capriles’ tweet reads:

“When ineptitude rules! Who can think of doing something like this in Dec and with the difficulties that we have? Maduro’s leadership!”

The ban of the 100-bolivar note amounts to removing 48% of the currency notes in circulation. According to data from the Venezuelan central bank, there were six billion 100-bolivar notes in circulation in November.

Many tech-savvy Venezuelans have already turned to more unorthodox stores of value like Bitcoin to escape the hyperinflation of the bolivar. Trading in the digital currency has been on the rise in Venezuela as evidenced by the growing turnover on P2P Bitcoin trading sites such as LocalBitcoins. Weekly turnover on LocalBitcoins for last week in Venezuela came in at 5,598,594 Venezuelan bolivars (223 BTC) - the second-highest reading since 2013:

Polychain Capital, a digital currency & blockchain-based digital asset hedge fund led by former head of risk officer at Coinbase, Olaf Carlson-Wee, has raised $10 million from Union Square Ventures and prominent bitcoin investor Andreessen Horowitz.

The San Francisco-based Polychain Capital will be looking to buy into various blockchain tokens with specific use cases and applications in the real world, “Disproportionate returns will go to holders of the tokens rather than investors in private companies built on top of the protocols,” states the Polychain Capital’s Angel page.

Carlson-Wee told Forbes there are many potential investment opportunities beyond bitcoin-focused startups, “There will be many types of assets codified into the blockchain, and they are all not just going to be on the bitcoin blockchain — it’s going to be a number of different assets here. And the best way to invest in that is a diversified portfolio,” he explains.

The 26-year-old entrepreneur believes these blockchain-based, P2P-style networks will eventually replace most of the centralized social media, finance & cloud storage companies on the internet today.

And one of the ways for institutional investors to profit from this trend is to gain exposure to the tokens of these networks. Today, all digital currencies, including bitcoin, are worth approximately $14.3 billion, according to data gathered by Coinmarketcap.com!

While this figure may not seem overly impressive when compared to some other industries, Carlson-Wee tells Forbes’ Laura Shin that a sizable portion of online economic activity may take place on these decentralized services in the near future, which may propel the value of some of these networks and their tokens into the hundreds of billions.

Carlson-Wee’s predictions may come to pass, but majority of alternative digital currencies have struggled over the past few years to maintain their valuations. Even ether - the token of the much-hyped Ethereum smart contract network and the second most valuable digital asset after bitcoin - has dropped close to 60% since May of this year.

An analysis done by cryptocurrency analytics site WooBull.com of 118 digital currencies that achieved a market capitalization of at least $250,000, shows how poorly the vast majority of these digital assets have performed when compared to bitcoin:

However, there are a few exceptions like gaming-focused digital currency Gamecredits, privacy-focused Monero and Storjcoin, the token of the P2P Storj cloud storage network, which have not lost value over the past 2-3 years.

At press time, the Polychain Capital page only displays a short disclaimer and the email address of Olaf Carlson-Wee.

In statements given to reporters today in Istanbul, Turkish President Recep Tayyip Erdogan has urged citizens to continue purchasing Turkish lira with their foreign assets to prop up the country’s sagging currency.

Erdogan praised cooperating Turks for their efforts, however, the president also urged all Turkish citizens to make further investments, “I believe my people should give more weight to this campaign,” he said.

Erdogan’s efforts may have temporarily halted the lira’s savage devaluation against the greenback this week, but a quick look at the USD/TRY chart shows that the lira’s troubles are far from over.

While the lira gained some ground against the dollar during the middle of the week, hitting a low of 3.337, the USD/TRY currency pair has resumed its uptrend over the past two days. On Thursday and Friday, the Turkish lira has lost about 4.9% against the greenback. At press time, the USD/TRY rate is hovering at 3.5 - only 7 cents below the all-time high of 3.586 - which was printed last Friday.

The lira’s demise was greatly exacerbated in the aftermath of the election of Donald Trump to POTUS. Since November 9, the lira has dropped 11% against the U.S. dollar!

The Erdogan administration, in addition to urging Turks to invest in the nation’s currency, has plans to boost local currency trading with some of Turkey’s largest trading partners - Russia and Iran - to ease FX market volatility, “I think we can remove the risk of currency volatility from our markets by taking these kinds of steps with countries with whom we have large foreign trade volume,” explained Erdogan, in statements to reporters on Friday.

It's unclear at this point if Erdogan's appeal to patriotism and various currency trade deals will slow down the lira's devaluation against other major currencies. However, there is already some evidence emerging that Turks are turning to alternative stores of value like Bitcoin to protect purchasing power. Charts from Coin.dance, which keeps track of turnover figures on P2P digital currency marketplace LocalBitcoins in various countries, show a sizable and consistent increase in Bitcoin trades being done in Turkey.

In the past three weeks, Bitcoin turnover in Turkey has increased considerably, with the biggest weekly volume taking place for the week ending on November 19, which showes TRY349,346 (141 BTC) worth of trades taking place in the country.

The ECB shocked markets today with their decision to reduce the asset purchase program (APP) down to €60 billion on a monthly basis - a €20 billion cut from the current monthly rate of €80 billion.

While financial markets reacted negatively to the surprise announcement - especially the EUR/USD - the reduced APP rate comes into effect at the beginning of April of next year, according to the ECB.

The ECB also stated the current €80 billion APP will remain in place until the end of March, 2017, with the possibility of increasing the asset purchase facility again if economic conditions deteriorate:

“If, in the meantime, the outlook becomes less favourable or if financial conditions become inconsistent with further progress towards a sustained adjustment of the path of inflation, the Governing Council intends to increase the programme in terms of size and/or duration.”

In a separate press release, the European Central Bank unveiled new details regarding its public sector purchase programme (PSPP). Securities with minimum maturities of one year will be taken up by the PSPP at the start of January, 2017.

Additionally, the ECB explained that it will start purchasing government bonds with “yield to maturity below the interest rate on the ECB’s deposit facility,” which currently stands at -0.4 percent.

The ECB left the main interest rates for refinancing, marginal lending and the deposit facility unchanged at 0.00%, 0.25% and -0.4%.
The EUR/USD pair was impacted the hardest by the ECB press releases and subsequent press conference by Mario Draghi, Governor of the ECB.

At press time, the euro is trading approximately 2.5 percent lower against the dollar, after hitting a daily high 1.0873 - a price not seen since November 11, 2016.

The Australian Bureau of Statistics (ABS) published a detailed breakdown today of which parts of the Australian economy declined in Q3 of 2016. While overall economic activity in Australia dropped 0.5 percent last quarter, the ABS states that overall economic growth is still positive:

“Through the year growth remains positive at 1.8 per cent, reflecting the three previous quarters of growth.“

According to the ABS, the decline in the construction industry, which registered a 3.6 percent drop due to lower investment in building activity, had the biggest effect on the GDP calculation. Sub-optimal growth numbers were also seen in the financial and insurance industries.

Additionally, the ABS also states that the growth in the agricultural sector helped offset the declines in most other industries:

“The largest offset to these falls was agriculture which grew 7.5 per cent. Mining production contributed no growth, but maintained its historically high levels of production.“

Currency Impact:

The Forex market did not respond very well to the bad economic figures. Yesterday, the Australian dollar lost 0.65 percent against the U.S. dollar in the space of 30 minutes, following the release the negative GDP print - the first one since May of 2011. However, today, the Australian currency gained 0.89 percent against the greenback, as bad consumer credit news coming out of the U.S. pushed the dollar lower.

Bitstamp, one of the few fully-licensed bitcoin exchanges in Europe, has launched an investment campaign on BnkToTheFuture platform. The Luxembourg-regulated exchange is looking to raise about $1.2 million from investors, “we are looking for USD 1.2M of investment in return for 2% of equity, which puts the pre-money valuation at USD 60M,” explains Vasja Zupan, Chief Operating Officer at Bitstamp.

Bitstamp initial investors and staff, including Vasja Zupan and CEO Nejc Kodric, currently hold approximately 138,345 shares. The fundraising campaign will add an additional 2767 shares at an initial price of $433.70 per share, assuming the entire 2 percent of equity on offer is absorbed by investors within the next fifty days. Investors who commit less than $10,000 will receive Class B shares, while investors above this threshold get Class A shares, which carry voting weight and several other benefits such as Drag Along Rights.

At press time, the Bitstamp campaign has raised $156,175 from 51 backers. According to statements by Vasja Zupan made on the BnkToTheFuture forum, Bitstamp doesn’t intend to make the shares tradable:

“As yet, we have no plans to make these shares tokenised and tradable on our exchange.”

The 38-employee Bitstamp is one of the few bitcoin exchanges that has showed a steady growth of active traders over the past 5 years.

While the pitch offers plenty of details on the existing shareholder structure of Bitstamp, specifics are lacking on how the new funds will be used to make the exchange more profitable.